Common Errors in Ind AS Financial Statements: FRRB Observations related to Foreign Exchange, Derivatives and EPS
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
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- Last Updated on 14 July, 2021
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The ICAI’s Financial Reporting Review Board (FRRB) was constituted as a proactive mechanism to improve financial reporting practices. The FRRB reviews general purpose financial statements of various enterprises for compliances with generally accepted accounting principles, compliance with the reporting obligations of the auditor and compliance with disclosure requirements prescribed by regulatory bodies, statutes and rules and regulations relevant to the enterprise.
Given the increasing importance of transparent financial reporting and compliance with the disclosures under Ind AS, we have started a column series of articles, in which we would take a closer look at some of the key non-compliances and errors observed by the FRRB in the study. In this article of the series, we look into the FRRB observations relating to Foreign exchange, derivatives and EPS in Ind AS based financial statements. One of such observation in respect of ‘Presentation of foreign Exchange Difference’ by FRRB is mentioned below:-
(i) Disclosure/ Scenario in the Financial Statements selected by the FRRB
Amount of foreign exchange differences realised during the year, which was negative, was shown under ‘Sale of products’ under the main head ‘Revenue from Operations’
(ii) Relevant Schedule III/ Ind AS/ Companies Act requirements
According to Note 3 of ICAI’s GN on Schedule III to the Companies Act, 2013 for the preparation of Statement of Profit and Loss require that revenue from operations is to be separately disclosed in the notes to accounts, showing revenue from (i) sale of products (including excise duty); (ii) sale of services; and (iii) other operating revenues.
(iii) FRRB Observation
Foreign exchange loss was deducted from revenue, which should have been presented under ‘Other expense’.
Therefore, ICAI GN on Schedule III was not complied with.
(iv) Author’s remarks
The presentation of foreign exchange differences should be carefully reviewed
Read the Full Article Here: Common Errors in Ind AS Financial Statements: FRRB Observations related to Foreign Exchange, Derivatives and EPS
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